Small Business Growth Strategies

Not having a business growth strategy is one of the top reasons small businesses fail. Small business growth strategies allow owners to identify concrete methods for increased revenue and business expansion. Business owners with a written plan can direct their focus methodically on their goals while they take tangible steps to achieve them.

There are many strategies for achieving business growth. The best approach, however, is always adaptable depending on the market, the business needs, and the owner's goals. Working with a business coach or advisor can help small business owners identify and adapt their strategies for growth.

Developing a strategy for expanding a business allows business owners to have a base framework for evaluation. It also allows them and their team of advisors greater ease in diagnosing and rectifying issues before they become fatal to the business. A strategic growth plan helps anticipate the company's needs at different growth stages.

Regardless of the differences between industry, size, organization, and management style, there are some commonalities concerning the stages of business growth. Considering the growth stage that a business is currently in will direct the most effective strategies to employ. Understanding business growth stages is the first step to navigating growth throughout the life cycle of a business.

In general, there are five stages of business growth: Existence, Survival, Success, Take-Off, and Resource Maturity.

Existence focuses on gaining customers and delivering a product or service. There is little to focus on beyond generating enough cash flow to keep up with demand.
Survival shifts focus to the demands between revenue and expenses. A bit more planning and organizing are involved at this stage to stay in business and generate the capital to facilitate growth.
Success comes when the business creates more profit and allows the option to take some risk in expansion. At this stage, an owner may begin stepping back and delegating more to a team of managers. Cash and borrowing power increases the ability to grow further.
Take-Off sets the stage for rapid growth and expansion. More operational and strategic planning is necessary at this stage, but the business can survive rapid growth and inevitable mistakes.
Resource Maturity allows time for fine-tuning all aspects of the business. More detailed planning is necessary to avoid stagnation.

A company that reaches a particular stage is not guaranteed to continue that upward momentum. It is possible at any stage for a business to slide back down to Survival, for example. Maintaining a plan for strategic growth depending on the current growth stage can help combat that potential.

A company that utilizes intentional growth strategies can plan for increasing costs by taking steps to increase profits. Plans help business owners to take calculated risks to recoup losses incurred in the Existence and Survival stages. Perhaps most importantly, plans for strategic growth give businesses a point of reference for quarterly and annual reviews.

Key Factors for Successfully Expanding a Business

Approaching business growth should be done from a financial, legal, sales, and marketing lens. Taking a proactive approach rather than a reactive one will increase the chances of success. Here are a few key factors to consider for successfully expanding a business:

1. Research

To start, a business owner should do their research. Understanding their company resources and their own abilities is one part of that research. What financial, personnel, and systems resources does their company have? What are their goals for their business, and their managerial and strategic abilities? The answers to these questions may point out some key areas they can target for growth with less risk. Additional research on understanding target customers, the current market, and competitors in the industry will also guide growth strategies.

2. Increase Customer Retention

An often overlooked key factor in expanding a business is focusing on increasing customer retention. Gaining new customers is five times more expensive than keeping existing customers. Increase customer loyalty by prioritizing customer service improvements, creating loyalty programs, and directing marketing efforts to existing customers.

3. Expand Product and Market Development

After completing research, a business owner should have identified potential areas for expansion. Depending on their business, this could be through either new products or services to offer to existing customers or new markets to target using their existing products or services. The least risky step for growth in this area is in efforts to increase sales of current products to existing customers in the current target market. Achieving increased sales in this way can be done by offering discounts to beat out competitors, for example. On the other end of the spectrum, a potentially more costly and risky effort regarding product and market development would be to create new products for entirely new markets.

4. Form Strategic Partnerships

Strategic partnerships between brands are a very effective way to increase growth. A mutually beneficial partnership between complementary products can increase market penetration and expand a company's reach to new customers. Working with a strategic partner can look like developing a new product, hosting an event together, or offering partner discounts when shopping with one or the other. A good example of a strategic partnership is Starbucks partnering with retailers and grocery stores like Target.

5. Fine-Tune Marketing Efforts

Another byproduct of research is a greater understanding of a company's marketing efforts. Analyzing the current market and target customers will give a business owner greater insight into the habits of their customers and where to reach them. When sales are down, small business owners often make the mistake of cutting back on their marketing budget. Spending enough cash on the most effective marketing efforts is an investment in the growth of a business.

Taking one step at a time is often more important than trying to tackle all potential efforts for growth at once. An adaptable business owner will continually reevaluate what is working for growing their business and redirect efforts when necessary.

Major Roadblocks that Stagnate Company Growth

One of the biggest mistakes a business owner can make is failing to innovate and avoiding taking risks. In particular, when a business has reached the Resource Maturity stage, it's easy for business owners to fall into a comfort trap. Growth cannot occur without some level of risk. Failure to innovate can relate to self-limiting beliefs carried by the business owner. To overcome this roadblock, the owner may need to overcome these beliefs.

Another roadblock for business owners is failing to balance their efforts in their business with their personal life. Micromanaging and failing to adequately delegate can lead to poor employee satisfaction and owner burnout. An owner who is constantly working in their business instead of on it fails to make time for strategic growth planning.

Relating more to the company itself, another major roadblock to growth is problems with cash flow. Being unclear on expenses and having insufficient resources leads to issues with cash flow. Identifying the source of the problem – whether it is from growing too fast or a margin that is too narrow – is the way to overcome this roadblock.

The employees working in a business can be either the biggest asset or yet another roadblock to growth. The wrong employees are both a time and financial drain on a company. Simply, if they are not helping the business, they are hurting it. Once a drain has been identified, business owners would be wise to let them go. Avoid this roadblock by taking the time to hire the right individuals and train thoroughly.

Building a Small Business Growth Strategy

First, understand that a small business growth strategy by design should evolve. A business growth strategy should outline a plan of action over the coming one to two years and be reevaluated and revised annually, if not quarterly. It is not a static document but one that accounts for company goals, analyzes accomplishments, and redirects as necessary according to current market demands.

One way to approach building a small business growth strategy is to look at each effort like a rung on a ladder. Lower risk and slower growth efforts are toward the bottom of the ladder, while higher risk and faster growth efforts are at the top. Starting at the bottom and working up as necessary can allow businesses to grow consistently without scaling too quickly. A laddered approach will not work for all companies, however. A business owner should evaluate what specific efforts will work best for their business and their team, whether through market penetration, overall diversification, product development, etc.

A written strategic growth plan focuses on the desired expansion and identifies actions to achieve that. Financial goals should be clearly defined while determining where the necessary capital will come from to facilitate growth. The plan should include staff requirements and outline whether or not new hiring will be needed. Finally, incorporate a plan for marketing and advertising to achieve desired growth.

Consult with a business coach or advisor for help with developing a strategic growth plan. A coach can help small business owners think ahead with an unbiased perspective on the market, competition, and the effectiveness of past growth efforts.

Executing a Strategy Consistently Once Its in Place

Once a business owner has developed a strategy, their work is far from over. Developing a strategic vision is a continual process needing revision regularly. Research and development efforts are essential to continue in response to changes in the market and the business overall. Continually evaluating the marketing strategy is also needed to determine which actions for increasing revenue are most effective.

It is easy for strategies for expanding a business to go forgotten with the everyday demands of running a business. Asking for help is a necessary part of executing a strategy consistently. Relying on trusted managers and team members to run the business will help owners focus on their growth strategy. Additionally, seeking help from a business coach keeps small business owners accountable for their plans.

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Coachwell has over 20 years of experience in helping businesses successfully grow. The personalized approach with Coachwell emphasizes sustainable growth while increasing profits, improving work-life balance, and minimizing risk. Prioritize your company's growth and success with the help of Coachwell's proven strategies!

Small Business Growth Strategies